Cyient Executives Call for Dedicated Foundries and Sector-Specific OSATs to Strengthen India’s Telecom Semiconductor Ecosystem

Senior executives from global engineering and technology solutions firm Cyient have outlined a critical path for India’s semiconductor ambitions, emphasizing the need for dedicated chip foundries and sector-specific Outsourced Semiconductor Assembly and Test (OSAT) units to build a resilient domestic ecosystem. According to an exclusive report by ETTelecom on May 29, 2026, Cyient’s President of Engineering and Technology Services, PNSV Narasimham, and Vice President & Head of Semiconductors, Suman Narayan, argue that while the India Semiconductor Mission (ISM) has spurred design and R&D, the absence of local advanced manufacturing and specialized packaging remains a significant vulnerability for the nation’s telecom and industrial sectors.

Building a Foundry Base: The Core of Telecom Chip Sovereignty

India’s current semiconductor strategy has successfully attracted major investments in chip design and research, with global players establishing significant design centers. However, Narasimham and Narayan highlight a persistent gap: the lack of domestic commercial semiconductor foundries. A foundry is a factory that manufactures integrated circuits (ICs) based on designs provided by other companies (fabless firms). For telecom network operators and equipment manufacturers, this gap translates to continued dependence on foreign foundries—primarily in Taiwan, South Korea, and the United States—for the production of critical components.

These components include baseband processors, RF transceivers, power amplifiers, and network switching chips essential for 5G and future 6G infrastructure, IoT gateways, and customer-premises equipment (CPE). The Cyient executives stress that establishing foundries, even if not at the bleeding-edge 3nm or 2nm nodes initially, is vital. Foundries specializing in mature nodes (e.g., 28nm, 40nm, 65nm) are crucial for a vast array of analog, mixed-signal, and power management chips that form the backbone of telecom hardware. Domestic production at these nodes would provide Indian telecom OEMs and Mobile Network Operators (MNOs) with a more secure, geopolitically stable, and potentially cost-effective supply chain for non-leading-edge components.

The OSAT Imperative: Specializing for Telecom and Industrial IoT

Beyond fabrication, Cyient’s analysis points to the assembly, packaging, and test (OSAT) stage as another critical bottleneck. While generic OSAT facilities are planned, Narayan advocates for the development of sector-specific OSATs. Telecom and industrial applications demand specialized packaging technologies that differ markedly from those used in consumer electronics.

For instance, telecom infrastructure chips require packaging that ensures high thermal performance, reliability under extreme environmental conditions, and superior signal integrity for high-frequency RF applications. Advanced packaging techniques like System-in-Package (SiP), Fan-Out Wafer-Level Packaging (FOWLP), and embedded die technologies are increasingly important for integrating heterogeneous components (e.g., RF, digital, memory) into compact modules for small cells, Massive MIMO antennas, and core network routers. A telecom-focused OSAT would develop expertise in these areas, directly catering to the stringent requirements of network equipment providers like Ericsson, Nokia, and domestic players, as well as Indian MNOs building out their 5G and fiber networks.

Impact on Telecom Operators and Network Infrastructure Strategy

The development of a localized semiconductor supply chain has direct, tangible implications for telecom operators and infrastructure providers across Africa, the Middle East, and Asia.

1. Supply Chain Resilience & Cost Management: Over-reliance on a concentrated global supply chain, as evidenced during the COVID-19 pandemic and ongoing geopolitical tensions, has led to severe equipment shortages and inflated costs for MNOs. A domestic Indian foundry and OSAT ecosystem would provide an alternative sourcing option for critical network components. For operators in Africa and the MENA region, which often source equipment through global vendors, a robust Indian semiconductor industry could lead to more diversified vendor bases and potentially lower costs as competition increases.

2. Tailored Solutions for Emerging Markets: Indian semiconductor players, supported by local foundries and OSATs, are more likely to design and produce chips optimized for the cost, power, and environmental realities of emerging markets. This could lead to more affordable, energy-efficient, and ruggedized telecom equipment tailored for rural deployments, extreme climates, and lower average revenue per user (ARPU) environments—factors critical for operators expanding coverage in Sub-Saharan Africa and rural India.

3. Strategic Leverage for Indian MNOs: Indian telecom operators such as Reliance Jio, Bharti Airtel, and Vodafone Idea could leverage a domestic chip ecosystem for strategic advantage. Closer collaboration with local semiconductor designers and manufacturers could enable customization of equipment for specific network architectures (e.g., Open RAN), faster iteration on software-defined networking (SDN) and network function virtualization (NFV) platforms, and enhanced security through sovereign control over critical hardware components.

Forward-Looking Analysis: The Telecom Sector’s Stake in Semiconductor Sovereignty

The call from Cyient’s leadership underscores a strategic inflection point. The telecom industry’s evolution—towards Open RAN, network slicing, AI-driven operations, and massive IoT—is inextricably linked to advancements in semiconductor technology. For India and other nations seeking technological sovereignty, controlling a portion of the semiconductor value chain is no longer optional; it is a prerequisite for national security and economic competitiveness in the digital age.

The success of the India Semiconductor Mission in attracting foundry and specialized OSAT investments will be a key determinant of the country’s ability to become a net exporter of telecom infrastructure technology rather than a perpetual importer. For global telecom stakeholders, a successful Indian semiconductor initiative introduces a new, significant player into the global equipment supply chain, potentially reshaping vendor dynamics and offering new partnerships for network build-outs worldwide. The next 24-36 months will be critical as the Indian government evaluates and incentivizes proposals under its semiconductor schemes. The decisions made will resonate through the global telecom infrastructure market for the next decade.